The National Electricity Market Operator – MEMO LLC, Skopje, has officially launched the registration process for new...
Written by: Nikola Stojanov, analyst
The Intraday market segment of our electricity exchange will be a great opportunity to eliminate or at least significantly reduce the risk, namely the cost of imbalances for all active market participants. Intraday trading will give them an opportunity to “smooth out unplanned deviations”, during the day, specifically shortly before the delivery or receipt of the traded electricity. This market segment of MEMO will be an open door to improve efficiency in work through the possibility of cutting the imbalance cost for all those who are “short” i.e. lack electricity or those who have unexpectedly created a “surplus”. The opportunity that MEMO will soon introduce will represent significant relief in operational planning for all market participants. At the same time, it will enhance market competitiveness, particularly for wind power producers whose electricity is traded on the power exchange.
With the introduction of this trading segment, the Macedonian power exchange will further strengthen the relevance of price signals, increase trading volumes, and make a significant contribution to improving the profitability of all participants in the organised market.
The intraday electricity market is the next major development on the agenda of the ambitious and successful team of employees and management of MEMO, following the successful implementation of the Day Ahead market segment.
The intraday electricity market segment primarily represents an opportunity to reduce costs for market participants. Ultimately, by increasing operational efficiency and reducing operational risk through lower imbalance costs, it will contribute to the overarching objective—improving the profitability of suppliers, generators, and electricity consumers.
Put simply, the intraday market segment represents the “last opportunity” for market participants to buy or sell electricity during the delivery day and thereby avoid balancing costs, which arise as an unavoidable correction for deviations from the nominated quantities of delivered or off-taken electricity at the level of the national transmission system.
The electricity system operates in real time and deviations are an inherent part of its operation Due to the nature of the technological processes of electricity generators, suppliers, and consumers, there are always risks of objective and unforeseen outages or failures that may prevent the nominated quantities of electricity from being delivered to or received from the transmission or distribution systems.
Because this is a dynamic technical system, failures of generation facilities, equipment outages, or unexpected changes in consumption may occur at any time. Objective situations exist in which a seller cannot deliver, or a buyer cannot receive, the full sold quantity of electricity within the agreed timeframe due to objective reasons that were not planned or could not be influenced by them.
And in such situations, the cost is high. Because planned production is lost, which can mean activation of guarantees and related costs, and in addition, an imbalance occurs in the electricity system, for which a penalty must be paid. This is because the system (i.e., MEPSO as the operator of the national transmission system) must secure electricity for national needs in cases of imbalance and pay penalties to the regional coordination center of national electricity system operators.
The intraday market segment of our power exchange is an excellent opportunity to eliminate this imbalance risk. Because it allows all those who are “short” i.e. lack electricity or those who have unintentionally created a “surplus” to be able to make a purchase not day ahead, but intraday when the need arises and immediately before the relevant delivery time interval. Through intraday trading, imbalance penalties can be much lower and less frequent, providing relief for all electricity traders, whether selling or buying.
For all registered participants in MEMO’s organised market, this market system ultimately represents an opportunity to improve profitability through the option to reduce or completely avoid the risk associated with imbalance costs. For them, this means greater efficiency in operations, which is a prerequisite for better profitability, which is the ultimate goal of all commercial entities participating in the organized electricity market.
The opportunity that MEMO will soon introduce will enhance market competitiveness, particularly for wind power producers whose electricity is traded on the power exchange. With the intraday segment, the market will be able to absorb their electricity supply to a much greater extent than is currently possible through the Day-Ahead segment, due to the nature of its operation.
Ultimately, the intraday segment will also improve MEMO’s overall offering, i.e., the organised electricity market. Because this market segment will increase the volume of traded energy through the electricity exchange, it will contribute to increasing the relevance and reputation of the organized electricity market.